Archive for September, 2008
House Vote Fails- Update From The CA Association of Realtors
September 30th, 2008 categories: Community Happenings
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Wall Street VS Main Street
September 29th, 2008 categories: Community Happenings
ARGH!
Dare I rant a little? What is the difference between Wall Street and Main Street? No, this isn’t a riddle and it shouldn’t be that hard to understand. Wall Street IS Main Street. It’s our economy. Your economy and my economy and all of our closest friends and neighbors all over the world’s economy. What does this credit crisis mean to you? It may mean that your employer doesn’t have access to the credit line that they use, when necessary, to cut your paycheck or to buy materials used in your industry. It’s not just ‘Fat Cats’ looking to buy their next million dollar home or luxury vehicle.
If our supposed ‘leaders’ don’t come up with a plan very, very soon, it’s Main Street that will be bleeding all over Wall Street. It’s your401K, IRA, job, that is at stake. This is no time for partisan politics. It’s interesting to note that the legislature is actually trying to learn from the mistakes of the past and some within won’t let it happen!!! We did have this same type of crisis once before, you may remember it or learning about it… I believe they called it the ‘Great Depression’. So, our congress is trying to work out a deal so financial institutions don’t collapse leaving us Main Streeter’s with no cash and no credit. Some of our ‘leaders’ are evidently unaware of the fire they are playing with and the extent of the damage they could do to their constituents- LIKE YOU AND ME DAMMIT!
Do I want an irresponsible, unthoughtful, shameful bailout for the rich and mighty of Wall Street so I can spend the next 25 years paying off the debt? OF COURSE NOT. And while I don’t have all the answers about the plan that has been in negotiations over this past week, from what I hear, it spans the concerns of both political parties, has oversight and transparency and most of all, will prevent the utter collapse of our tenuous economy.
You (and I) need to let your representatives know it’s not okay to delay. We need to act now- as a cohesive society for our own preservation. Nothing will happen over the next couple of days due to the High Holidays but when congress resumes, we had better have a plan or it’s you and me that will pay the price. There’s no room for petty differences in this case and petty they will seem when this thing comes to a screeching halt.
Do the right thing and COMPLAIN!
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It’s Party Time!
September 29th, 2008 categories: Community Happenings
“What?!?”, you say? That’s right- I said “PARTY TIME”! What better time to have a party than when people need each other the most?
When times get tough, we have the natural tendency to retreat from the world. We conserve our energy, our money and hunker down waiting for the good times to come again. Why wait? Why not bring friends and business partners together for an evening (or afternoon) of lighthearted fun? Not only will it make everyone feel better, it can also create new business alliances between your friends and partners.
These turbulent times we are facing in our economy in practically every sector can make one feel like they are David battling Goliath. Every one of us can at times feel a little defeated in the face of a market that continues to evade recovery. I read in some Rah-Rah management book once the adage, “None of us is smarter than all of us” and I have come to realize the wisdom in that line. Getting people together, sharing ideas or just reminding each other that we’re all in this together can be wonderfully empowering.
This last weekend I had the opportunity to bring my friends and colleagues together for a casual cocktail and BBQ party. Every one of us is feeling the pinch of the economic downturn. We’re all working harder for less money and feeling the stress of our country’s economic crisis. But, as the guests arrived- some old friends and some new acquaintances- there was a feeling of community; a feeling that none of us are alone and ultimately have the support of each other. That’s a powerful antidote to the malaise of the crestfallen. It’s what’s best about the human family, our need for each other and our ability to rise up against the odds particularly with a boost from a friend.
So I ask you; what are you waiting for? There’s no better time for a party than when you need it the most. If you don’t need it, maybe you can bring a little light into your friends lives. See what happens when you reach out and bring people together. ‘We’ can overcome anything!
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Key components of U.S. Dept. of the Treasury Proposal
September 25th, 2008 categories: Our Market
Last Friday, the U.S. Dept. of the Treasury submitted its proposal to promote stability in the U.S. financial markets.Key components of the Treasury’s initial proposal included:
. The authority to issue up to $700 billion of treasury securities to finance the purchase of troubled
. Assets will be managed by private asset managers at the direction of the Treasury.
Cash received from liquidating the assets will be returned to the Treasury’s general fund for the benefit
. Funding for the program will be provided directly by the Treasury from its general fund by increasing
. Once the program is up and running, Treasury will provide updates to Congress semi-annually.
The proposal also would grant Treasury Secretary Paulson sweeping authority regarding the purchase of
On Tuesday, Congress weighed in on the proposal and members of both parties asked for several additions or refinements, including:
. Legislation to help homeowners avoid foreclosure;
. Limiting compensation to executives of troubled firms receiving assistance;
. Greater oversight than the limited bi-annual reporting mechanism in the current proposal;
. Allowing the government to take an ownership stake in companies;
. Decreasing the timeframe for the Treasury workout from two years to one; and
. Limiting the initial outlay followed by a reassessment early next year prior to deploying additional resources.
On Wednesday, Secretary Paulson, Federal Reserve Chairman Ben Bernake, and members of Congress testified before the Housing Financial Services Committee, where legislators proposed adding an imposed tax on Wall Street firms and banks to help pay the cost of the program, and lessen the burden to taxpayers.
NAR President Richard F. Gaylord recently announced the creation of a Presidential Advisory Group to address this critical issue. Five California REALTORS® were appointed to the 20-person Presidential Advisory Group .
According to C.A.R.’s sources, Congress may work through the weekend and into next week to finalize and pass legislation. C.A.R.’s and NAR’s Leadership Teams are in close contact with elected officials and other key leaders in Washington to ensure that interests of the real estate industry are represented.
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Congressional Hearings On U.S. Financial Market Rescue…Cont.
September 24th, 2008 categories: Our Market
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Update From The California Association of Realtors on the Financial Bailout
September 23rd, 2008 categories: Our Market
CA Association of Realtors
Monday, September 22, 2008
Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®
Sept. 22, 2008
Dear C.A.R. Member:
As promised, here is your first Market Matters Daily Briefing on the evolving financial situation impacting our nation. All this week, C.A.R. will be closely following developments in Washington and will be reporting to you, as needed, via this Briefing e-mail, and through C.A.R. Newsline, or Market Matters.
As expected, this weekend the U.S. Dept. of the Treasury submitted its proposal to promote stability in the U.S. financial markets.
Key components of the Treasury’s proposal include:
- The authority to issue up to $700 billion of Treasury securities to finance the purchase of troubled residential and commercial mortgage-related assets, including mortgage-backed securities and loans.
- This authority would expire in two years, and assets must have been originated or issued on or before Sept. 17, 2008, to qualify.
- Assets will be managed by private asset managers at the direction of the Treasury.
- Cash received from liquidating the assets will be returned to the Treasury’s general fund for the benefit of taxpayers.
- Funding for the program will be provided directly by the Treasury from its general fund by increasing its debt limit by $700 billion.
- Once the program is up and running, Treasury will provide updates to Congress semi-annually.
The proposal also grants Treasury Secretary Paulson sweeping authority regarding the purchase of assets, the timing and sale of assets, determining financial institutions’ eligibility to participate and more. To access a fact sheet on the Treasury proposal, go to http://www.treasury.gov/press/releases/hp1150.htm.
Congress is weighing in on the Treasury’s proposal today, and may seek to add an oversight structure, limit the compensation of executives at the companies benefiting from the rescue, and provide mortgage relief for struggling borrowers. We’ll report on this effort in detail tomorrow. As part of that process, House Financial Services Committee Chairman Barney Frank has scheduled a committee hearing this Wednesday.
Our sources tell us that it may be overly optimistic to expect final legislation to be brought forward by Friday and cautioned us to expect this to run into next week. Your Leadership Team will remain in close contact with elected officials and other key leaders in Washington to ensure that the interests of the real estate industry are represented. We’ll be ready to weigh in on the final legislative package, and will keep you informed.
Thanks to all who have shared their thoughts with me this past week.
Sincerely,
William E. Brown
2008 President
CALIFORNIA ASSOCIATION OF REALTORS®
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Making Some Sense Out Of The Chaos
September 17th, 2008 categories: Community Happenings
How many of you out there feel like you’re on a roller coaster? Every day we hear about one disaster after the next. It’s enough to make one ready to crawl into that proverbial cave and hunker down to wait it out. From hurricanes to less natural disasters such as the imploding financial markets in the U.S., it’s hard to find a reason to venture forward into the chaos to try to find the deal that makes it all worthwhile. I know it’s out there and I hate having to subsist in this down cycle without somehow taking advantage of it. So, how to make lemonade from the mountain of lemons raining down?
It seems like the only people making money in Real Estate today are those dealing in REO’s, aka foreclosed properties. Foreclosure market activity in North County San Diego, particularly in the Coastal areas, is very brisk. In fact, I personally have missed out on two opportunities due to acting too slowly. However, the fatal flaw would be getting into a deal that lacks thorough investigation. The risk is high today. We don’t know when the market will turn around. To offset your risk, you need to make sure you are buying right- the right property at the right price. ‘A+’ locations minimize risk and there are many fewer foreclosures in more affluent areas. Of course, the best hedge against your risk is getting a smokin’ deal. Researching comparable properties in the area will give you a good read on what constitutes a great deal and it is also helpful to know what the bank ‘bought’ the property for. This is public information and can be accessed on-line via your favorite Real Estate professional.
Here are some statistics from our local Real Estate Market;
Sold home prices decreased by 2.57% in North San Diego County from July to August creating a new median price for detached and attached homes of $390,000. Detached homes fell 1.64% to $450,000 while attached homes increased in August by 3.45% to a new median price of $261,200. For San Diego County (excluding North County) sold home prices fell 4.38% to a new median price of $360,000 in the detached sector and Non-North County attached homes decreased 5.69% to $232,000. Countywide, the median price of homes sold decreased from $407,500 in July 2008 to $390,000 in August and was down 32.76% from the August 2007 number.
MEDIAN PRICE GRAPH
The current condition of the housing market needs to be kept in historical perspective. Home values rose 88% on a national average-higher in California- over the past decade. Sales continue to be hampered by problems in Real Estate finance. Both tighter underwriting standards and the ongoing effects of the credit/liquidity crunch continue to limit sales. Buyers with secured financing or all cash are not hampered by these constraints. In fact, several North County brokers and agents have experienced significant increases in activity in recent weeks, working with well-qualified buyers who recognize optimum buying conditions with which there are low interest rates and an abundant selection of homes on the market.
Median days on the market for single family detached homes in North County increased from 49 to 54 days between July and August and the Average days on the market rose from 73 in July to 77 in August. The median number relates to an equal number of days (in this instance) above and below the median number where as the average is an average of all the number (of days) needed to sell a home. The number of North County single family homes sold decreased 14.27% in August to 703 from 820 in July but there was a year-over-year increase in sales of 8.49% from the 648 homes sold in August 2007.
The single family detached median price per square foot fell to $228 in August 2008 from $232 in July, down from $304 in August of 2007.
A bit of good news is active listings decreased in August by 217 homes from July and were down by 531 from one year ago. A great sign for better times ahead is affordability is higher today than it has been for years in San Diego County. Due to the recent uptick in mortgage rates, affordability in North County actually decreased by 1% but remains at a high 20%. Overall San Diego County is sporting a 25% affordability ratio. That’s considerable when compared to a few short years ago when the affordability ratio dipped into the single digits.
What’s the outcome of this tale? Our market continues to struggle but it is creating some exciting opportunities for those who can afford to take advantage of them. Those who are less reliant on financing or well qualified are in a position to buy properties from banks today for pennies on the dollar. Often times the more physically distressed a property is, the more likely the bank is to accept the low- lowball offer. Obviously there are fewer buyers who are equipped to deal with rehabilitating properties. Most buyers are still looking for foreclosed homes with as few blemishes as possible. With the help of a General Contractor (such as Pacific Shoreline Home Building, Inc. for instance), home buyers can look for properties with significant cosmetic flaws while being structurally sound and set the stage for tremendous appreciation potential.
It’s easy today to become mired in the depressing information that is constant and relentless. While we do find ourselves in turbulent times, it’s important to remember that without the volatility, the opportunities wouldn’t exist. So put on your positive thinking cap and let’s see if we can’t come up with an opportunity that will serve you well into the future.
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National Home Value Drop Moderates in Second Quarter
September 4th, 2008 categories: Our Market
Home Values Up In New England, North and South Central Regions
McLean, VA – Freddie Mac (NYSE: FRE) announced today that its Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series registered a modest 0.4 percent annualized decline in U.S. home values during the second quarter of 2008, following a downward revised 10.8 percent annualized drop in the first quarter. Over the four quarters ending with the second quarter of 2008, home sales prices fell an average of 6.0 percent in the CMHPI Purchase-Only Series – the largest annual fall in values over the 39-year history of the series. “While U.S. home value indexes continued to decline, an encouraging sign has been the significant moderation in the rate of decline of the Purchase-Only series,” said Frank Nothaft, Freddie Mac vice president and chief economist. “After falling sharply over the prior two quarters – more than a 10 percent annualized drop – home value depreciation slowed substantially to only a 0.4 percent annualized rate. While we expect to see further declines in average U.S. home values throughout this year and into 2009, we will be watching for signs of stabilization in indicators of real housing activity, such as a leveling off in home sales and for-sale inventories.”Another good sign was that home values in some parts of the U.S. have remained stable or edged up.
Most areas in the West South Central region (Arkansas, Louisiana, Oklahoma and Texas) experienced price gains over the quarter and the past year. “Thirteen states registered price gains over the past year, and 33 states had increases in the second quarter, according to the CMHPI Purchase-Only Series. Modest annual price gains of 2 percent or more occurred in North Carolina, North Dakota, Oklahoma, South Dakota, Texas and West Virginia which have benefited from stronger local economies. Annual drops of more than 10 percent occurred in Arizona, California, Florida, Michigan and Nevada, which have experienced either weak local economic conditions or overbuilt markets. The CMHPI Purchase-Only Series excludes all refinancings in its calculation. Freddie Mac also produces a CMHPI Classic Series that includes data from both home purchase transactions and mortgage refinancings, with the latter values based on appraisals. The Classic Series tends to lag changes in the Purchase-Only Series because of the inclusion of refinanced loans. The CMHPI Classic Series indicated that home values fell 7.3 percent nationally during the second quarter on an annualized basis, the steepest quarterly decline since 1971. Over the year ending with the second quarter, home values depreciated 2.9 percent on average in the Classic Series, the first annual drop in this index over the 39 years spanned by the series.
The Conventional Mortgage Home Price Index (Purchase-Only) Series shows the following regional performances:
West South Central Division (AR, LA, OK, TX): rose 1.7 percent (7.0 percent, annualized) in the second quarter of 2008. Over the last 12 months, home values increased 1.6 percent, and during the last five years, home values increased 27.3 percent.
Middle Atlantic Division (NJ, NY, PA): decreased 0.5 percent (–2.2 percent, annualized) in the second quarter of 2008. Over the last 12 months, home values decreased 2.6 percent, and during the last five years, home values increased 38.8 percent.
East South Central Division (AL, KY, MS, TN): increased 1.7 percent (7.0 percent, annualized) in the second quarter of 2008. Over the last 12 months, home values decreased 0.2 percent, and during the last five years, home values increased 26.7 percent.
East North Central Division (IL, IN, MI, OH, WI): increased 1.8 percent (7.5 percent, annualized) in the second quarter of 2008. Over the last 12 months, home values decreased 4.0 percent, and during the last five years, home values increased 8.5 percent.
Mountain Division (AZ, CO, ID, MT, NM, NV, UT, WY): decreased 0.6 percent (–2.6 percent, annualized) in the second quarter of 2008. In the last 12 months, home values decreased 5.6 percent; during the last five years, home values increased 39.5 percent.
West North Central Division (IA, KS, MN, MO, ND, NE, SD): increased 1.9 percent (7.7 percent, annualized) in the second quarter of 2008. Over the last 12 months, home values decreased 2.3 percent; over the last five years, home values increased 15.8 percent.
South Atlantic Division (DC, DE, FL, GA, MD, NC, SC, VA, WV): decreased 0.3 percent (–1.0 percent, annualized) in the second quarter of 2008. Over the last 12 months, home values decreased 5.5 percent, and during the last five years, home values increased 33.7 percent.
New England Division (CT, MA, ME, NH, RI, VT): increased 0.3 percent (1.2 percent, annualized) in the second quarter of 2008. Over the last 12 months, home values decreased 5.1 percent, and during the last five years, home values increased 18.1 percent.
Pacific Division (AK, CA, HI, OR, WA): decreased 3.5 percent (–13.1 percent, annualized) in the second quarter of 2008.
Over the last 12 months, home values decreased 16.5 percent, and during the last five years, home values have increased 29.5 percent.Jointly developed by Freddie Mac and Fannie Mae and first published by Freddie Mac starting in 1994, the Conventional Mortgage Home Price Index features indexes for the nine Census divisions as well as a national index. The national index is the average of the nine divisional indexes weighted by the distribution of one-unit detached, single-family structures in each Census division. Unlike other home price indexes based on mean or median values of homes sold during a given period, the Conventional Mortgage Home Price Index is constructed, using regression techniques, from observations of actual sales prices or appraised values of the same homes over time. The street addresses of properties that serve as collateral for mortgages funded by the two secondary mortgage market firms are first processed using software certified by the United States Postal Service to create a uniform address format and are then matched to identify consecutive transactions on the same property.
There are currently more than 35 million records in the repeat-transactions database used to construct the classic Conventional Mortgage Home Price Index – this database includes transactions on one-unit detached and single-family townhome properties serving as collateral on loans originated through the second quarter of 2008 and purchased by Freddie Mac and Fannie Mae by July 31, 2008.Freddie Mac publishes the Conventional Mortgage Home Price Index each quarter. Index values and growth rates for the nation as a whole as well as for the nine Census divisions, the 50 states and the District of Columbia, and 392 metropolitan statistical areas (MSAs) and metropolitan divisions under the classic series of the CMHPI are available and the purchase-transaction only series is available for the nation and nine Census divisions. All of the CMHPI series can be found on Freddie Mac’s web site, www.freddiemac.com/finance/cmhpi/. Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac raises capital on Wall Street and throughout the world’s capital markets to finance mortgages for families across America. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.
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